| Dear Center Members: |
The purpose of this GAQC Alert is to inform you that last night the U.S. Office of Management and Budget (OMB) released memorandum M-20-17, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations. Read on to learn more about the following:
- Background;
- A 6-month single audit submission extension;
- Other guidance; and
- Looking forward.
|
|
|
Background
As noted in GAQC Alert #398, OMB previously issued a memo (M-20-11) that directed federal agencies to take action to provide waivers and extensions for grant recipients performing essential research and services necessary to carry out the emergency response related to COVID-19. As expected, OMB has now issued a 2nd memo (M-20-17) intended to provide administrative relief to an expanded scope of recipients affected by the loss of operational capacity and increased costs due to the COVID-19 crisis.
Like the first memo, M-20-17 is directed at federal agencies. It instructs that federal awarding agencies are authorized to take certain actions, as they deem appropriate and to the extent permitted by law, with respect to the administrative provisions that apply to recipients affected by COVID-19 (for both recipients with COVID-19 related grants and other types of federal grants). The memo states that awarding agencies are required to maintain records on the level of particular exceptions provided to recipients and for several actions further described below, it states that agencies must require recipients to maintain appropriate records and documentation to support certain charges to federal awards.
Single Audit Extension
The memo states the following and provides for a 6-month extension:
Awarding agencies, in their capacity as cognizant or oversight agencies for audit, should allow recipients and subrecipients that have not yet filed their single audits with the Federal Audit Clearinghouse as of the date of the issuance of this memorandum that have fiscal year-ends through June 30, 2020, to delay the completion and submission of the Single Audit reporting package, as required under Subpart F of 2 CFR § 200.501 -Audit Requirements, to six (6) months beyond the normal due date. No further action by awarding agencies is required to enact this extension. This extension does not require individual recipients and subrecipients to seek approval for the extension by the cognizant or oversight agency for audit; however, recipients and subrecipients should maintain documentation of the reason for the delayed filing. Recipients and subrecipients taking advantage of this extension would still qualify as a "low-risk auditee" under the criteria of 2 CFR § 200.520 (a) - Criteria for a low-risk auditee.
The good news is this extension is broad and does not require the federal agencies to take any other action for the 6-month extension to become effective. However, auditors should consider reminding clients of the requirement they maintain documentation on file that includes the reasons for the delayed filing.
Other Guidance Provided
M-20-17 provides guidance to the federal agencies in various other areas. Members should read the memo in its entirety to ensure a full understanding. In particular, the GAQC has been getting numerous questions about the allowability of payroll costs when recipients' operations have been affected by COVID-19. The new memo addresses this topic and instructs federal agencies, among other things, that they may allow recipients to continue to charge salaries and benefits to currently active federal awards consistent with the recipients' policy of paying salaries (under unexpected or extraordinary circumstances) from all funding sources, federal and non-federal. There are other caveats provided on this topic and agencies are instructed to require recipients to maintain appropriate records and cost documentation to substantiate the charging of any salaries and other project activities costs related to interruption of operations or services.
M-20-17 also addresses the allowability of costs not normally chargeable to awards and, again, instructs the federal agencies to require recipients to maintain appropriate records and cost documentation to substantiate the charging of any cancellation or other fees related to interruption of operations or services. Other areas of guidance in the memo include exemptions of certain procurement requirements, extensions of currently approved indirect cost rates, and other various application and reporting waivers and extensions.
Looking Forward
The new memo acknowledges that many of the operational impacts and costs relating to COVID-19 are unknowable at this point, as they will depend on the spread of the virus and response dictated by public health needs. It also states that the exceptions are time limited and will be reassessed by OMB within 90 days of the new memo's issuance.
It is still unclear how the agencies will issue detailed guidance in response to the new memo's issuance but they do have expanded direction now, from OMB, and a requirement to maintain records on the level of particular exceptions provided.
As each day passes, it becomes increasingly clear the impact of COVID-19 on 2020 single audits is more significant than originally anticipated. The GAQC will continue to monitor all current developments and communicate updates via future GAQC Alerts to keep our members apprised.
We continue to wish you the best at this challenging time and hope that, in particular, the single audit submission extension provided by OMB yesterday will take some of the immediate pressure off both you and your clients. * * * * *
Sincerely,
AICPA Governmental Audit Quality Center |
|
 |
|
| In This Alert |
|
|
| Rural Development Extension |
| Today, the U.S. Department of Agriculture Rural Development (RD) has issued a temporary exception to the codified policies and procedures in 7 CFR 1773, Rural Utilities Service Policy on Audits of RUS Borrowers and Grantees. They will be informing awardees by email that all audited financial statements due to RD in March or April 2020 are granted a 60-day extension. RD will continue to monitor the situation and consider future adjustments as warranted. |
|
| Additional Resources |
|
|
| Stay Informed |
We welcome any suggestions or questions - please send them by e-mail at GAQC@aicpa.org.
Members of the Governmental Audit Quality Center (GAQC) may only reproduce and distribute GAQC Alerts internally within the firm or state audit organization (SAO) to other Center member firm/SAO personnel as part of the organizations' professional services. For information about permission to copy any part of these documents for redistribution or inclusion in other work, please click on the copyright notice below or phone the copyright permission hotline (919) 402-4031.
©2020 Association of International Certified Professional Accountants.
Online privacy policies and copyright information |
|
|
|
